Mid Atlantic Brewing News February/March 2016 : Page 1

By Greg Kitsock W ILLUSTRATION BY HANS GRANHEIM e’ve hit a record high. As of the end of November, there were 4,144 breweries in the United States, according to the calculations of the Brewers Association (BA). That tops the previous high-water mark of 4,131, set back in 1873, when Ulysses Grant occupied the White House and inventions like the telephone, the electric light bulb and the automobile were still years off. According to Bart Watson, the BA’s chief economist, the figure includes all brick-and-mortar breweries, both craft and non-craft, but not contract operations that rent other people’s facilities. Look for the number to climb even higher. The BA knows of 1,868 breweries in planning, states Watson. The state with the greatest number of breweries, as of Dec. 9, 2015, is California See Breweries p. 3 Philly, Baltimore Confabs Expecting Record Turnouts By George Hummel & Alexander D. Mitchell IV he Mid-Atlantic in 2016 will become ground zero for the burgeoning craft beer industry. Not only will the annual SA-VOR beer-and-food festival unfold as usual (June 3-4 at its usual haunt, the National Building Museum in Wash-ington, DC), but the region will host two major conferences, the first for professional brewers and the second for homebrewers. Both are expecting record turnouts. T Brewers Conference & BrewExpo America Trade Show (CBC), to take place in Philadelphia May 3-6. Things have grown quite a bit since craft brewers last convened here. BA director Paul See Confabs p. 4 First comes the Brewers Association’s 33rd annual Craft

Breweries Reach Record Number

Greg Kitsock

We’ve hit a record high. As of the end of November, there were 4,144 breweries in the United States, according to the calculations of the Brewers Association (BA). That tops the previous high-water mark of 4,131, set back in 1873, when Ulysses Grant occupied the White House and inventions like the telephone, the electric light bulb and the automobile were still years off.<br />
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According to Bart Watson, the BA’s chief economist, the figure includes all brick-and-mortar breweries, both craft and non-craft, but not contract operations that rent other people’s facilities.<br />
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Look for the number to climb even higher. The BA knows of 1,868 breweries in planning, states Watson.<br />
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The state with the greatest number of breweries, as of Dec. 9, 2015, is California with 514, followed by Washington with 284 and Colorado with 274.<br />
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In the Mid-Atlantic area, Pennsylvania had 172; Virginia, 124; Maryland, 58; New Jersey, 45; Delaware, 15; West Virginia, 12; and Washington, DC, 8.<br />
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“The numbers are always difficult to pin down precisely,” concedes Watson. “With two breweries opening a day, it’s easy to miss a few.” (Indeed, according to MABN’s figures, the District of Columbia had 12 breweries operating as of early December.)<br />
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The BA’s announcement brought celebration, but also concern that the market was becoming oversaturated. The decades following 1873 brought a mass extinction of breweries as price wars and consolidation reduced the number to about 1,500 by 1910.<br />
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Will history repeat itself? There are some ominous signs. The year 2015 saw some major buyouts and mergers, as Lagunitas Brewing entered into a 50-50 partnership with Heineken, Constellation Brands (the company that markets Corona) purchased Ballast Point for a cool $1 billion, and Anheuser-Busch loaded its shopping cart with small breweries.<br />
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In some markets, independent craft brewers have accused the big companies of predatory pricing. Last April, Beer Business Daily reported that AB was selling its Shock Top and Goose Island brands for as little as $56 a keg in Washington State.<br />
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Watson expects new openings to slow down, but he also notes, “Things are very different now than they were in the 1870s.” U. S. population then was about 40 million, about one-eighth of what is now.<br />
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He also observes, “The majority of new openings are small, hyper-local brewers. Many are more like neighborhood bars or restaurants than production breweries. I still think there is room for a lot more.” <br />
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Industry analyst Bump Williams agrees that we haven’t yet reached the apex. “The consumer, and now the retailer, wants something new every single time they go shopping and this is one of the driving forces for new brewery openings,” he comments. But he cautions, “I do believe that the rate of brewery closings will begin to accelerate due to poor quality and lack of innovation.” <br />
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A big factor is that it many areas you can sell directly out of your tasting room—you don’t have to rely on someone else to get your beer to market. “With legislation being the way it is, allowing craft brewers to be brewers, retailers (brewpubs, tasting rooms, growlersto- go, packages to go) and distributors, what’s to stop this growth from continuing?” asks Williams.<br />
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Market Underserved?<br />
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Indeed, there is an upbeat mood among fledgling brewers that the market still presents plenty of opportunity.<br />
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The New Jersey Craft Beer website lists 34 breweries in various stages of startup, including Alementary Brewing in Hackensack. Founder Blake Crawford believes his state is still “completely underserved,” asserting, “New Jerseyans are rabidly loyal, and even though we haven’t even opened our doors yet, they’ve already adopted us in this area as their local brewery.” He credits social media such as Facebook and Twitter as a driving force behind the proliferation of small breweries.<br />
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Ditto for Atco Brewing in Camden County, whose co-owner Sean Iuliucci contends, “The big guys are going to get beat up by the little guys. So many local breweries put out good beer.” <br />
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Roger Johnson, co-founder of Screech Owl Brewing in Bruceton Mills, WV, voices a more cautious view. “As with anything, there will be a saturation point in the craft beer industry and a great reversal with many closings and lots of equipment for sale for pennies on the dollar somewhere down the road.” <br />
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Too many startups, hoping to be the next Dogfish Head or Stone, are overbuilding and incurring massive debt, he believes. “I almost feel sometimes I am sitting here watching lemmings following each other over the cliff.” <br />
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Johnson’s recipe for success is making high-quality beer and “keeping our debt-toearnings ratio as low as possible,” avoiding haphazard growth. He brews on a Sabco Brew Magic half-barrel system, and will upgrade to a 3.5-bbl system this spring. He continues, “We are (in the tradition of the old farm breweries) selling everything straight from the brewery to the consumer. … When we do start distributing it will be only to selected venues; we are being very picky about where our beer goes.” <br />
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Kathy Ganser-Abate contributed to this article.<br />

Philly, Baltimore Confabs Expecting Record Turnouts

George Hummel & Alexander D. Mitchell IV

The Mid-Atlantic in 2016 will become ground zero for the burgeoning craft beer industry. Not only will the annual SAVOR beer-and-food festival unfold as usual (June 3-4 at its usual haunt, the National Building Museum in Washington, DC) , but the region will host two major conferences, the first for professional brewers and the second for homebrewers. Both are expecting record turnouts.<br />
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First comes the Brewers Association’s 33rd annual Craft Brewers Conference &amp; BrewExpo America Trade Show (CBC), to take place in Philadelphia May 3-6. Things have grown quite a bit since craft brewers last convened here. BA director Paul Gatza notes, “We drew approximately 1,500 attendees in 2005 in Philadelphia. We expect 13,500 or so for 2016.” That’s even a big jump over the 11,500 who gathered for the CBC in Portland, Ore. Last year.<br />
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You need a large venue to accommodate crowds like that. Previous welcome receptions have taken place at the National Air and Space Museum in DC; Mile High Stadium in Denver; and Veterans Memorial Coliseum in Portland. This year it will happen May 3 at the Philadelphia Museum of Art. Three days of seminars and speeches will follow at the Philadelphia Convention Center. Keynote speaker will be Billy Beane, executive vice president of baseball operations for the Oakland A’s and the inspirational subject of the book and movie Moneyball.<br />
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Judging for the biannual World Beer Cup, described as the “Olympics of beer,” is set to occur May 1-3. Two years ago in Denver, 4,754 beers from 58 countries competed in 94 style categories. Winners will be announced at a dinner and awards ceremony on the last day of the conference.<br />
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The CBC is an event for brewing professionals, but rank-and-file beer drinkers can expect Center City bars to be extra busy. That guy on the barstool next to you could be a rock-star brewer dispensing some extra special beers not normally available. Every year a regional brewer or brewers are tapped to brew a special Symposium Beer for the conference. This year’s commemorative brew is rumored to be a rye Vienna-style named Brotherly Suds, which will also be served during Philly Beer Week. Sly Fox Brewing will package it in 16-oz cans for both events; Stoudts Brewing will make a draft version for PBW only.<br />
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On June 9-11, the 37th annual American Homebrewers Association Conference, aka HomebrewCon 2016, is slated for Baltimore, and organizers are likewise preparing for a record turnout. <br />
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“Philadelphia's conference three years ago drew about 3,400, and last year's in San Diego drew 2,900, so 4,000 is a realistic number,” said Les White, president of the Free State Homebrew Club Guild, an alliance of sixteen Maryland clubs that’s helping to coordinate the conference. (By contrast, when the conference was last held in Baltimore in 2005, it attracted 857 attendees.)<br />
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“There tend to be more homebrewers along the East Coast,” said White. “We know of 600- 800 active homebrewers within an hour or so of Baltimore.” <br />
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The extended weekend will feature seminars on brewing techniques and beer tasting and critiquing, as well as tours of local breweries and brewpubs. Winners will be announced for the National Homebrew Competition, a contest that last year attracted 7,663 beer, cider and mead entries.<br />
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But the highlight of every conference is usually “Club Night,” a massive party of homebrew clubs pouring free samples of their members' products. Clubs set up multi-tap booths with themes often tied to their home territory (i.e., sandy beaches and palm trees for Florida). Sadly, the American Homebrewers Association has retired the Golden Urinal award, which formerly went to the club that brought along the most kegs of homemade beer.<br />
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“We drew approximately 1,500 attendees in 2005 in Philadelphia. We expect 13,500 or so for 2016.”<br />